The Money Lessons I Learnt as a Fresh Grad

Since secondary school, I understood the importance of money management and the impact it could have on our lives. I didn't know how to make a lot of money per se, but I did know what I could do to reduce my spendings.

Getting a scholarship

One of the largest expenditures a teenager could have after secondary school is tuition fees. I knew I wanted to attend a private institution (partly due to non-bumi status), but it would be significantly more expensive compared to a public institution.

After some calculations, I decided on a private college in my city. The reason was simple: staying back in my city means I could save on rentals and I get to enjoy home-cooked meals. This easily saved me a total of RM5,400 on rentals alone for the duration of my studies (assuming RM300 x 18 months).

The other major reason was because this college provided a 100% scholarship which I was eligible to apply. This helped me save RM25,800 and closed the gap between the dilemma of private vs public institution. However, I still spent a sum of RM12,190 for college (RM4,540 A-Levels examinations + RM7,650 miscellaneous). There were of course alternatives, but it would either mean compromising for a lower quality education, or studying in a different city which would cost more overall considering rentals and meals. The risk/reward ratio¹ was very clear here.

For comparison's sake, the most affordable public institution I could find is a 2 years 9 months diploma at Universiti Malaysia Pahang². It costs a total of RM5,540 for a diploma, a whopping 54% discount to what I took. But this is not an apple-to-apple comparison. I picked A-Levels for the flexibility it provided in terms of which university I could go to.

As shown, planning out your tertiary education with scholarships in mind is crucial. It can help open doors that would otherwise be unavailable to you. My advice for those in secondary schools, pay attention in class!

Having a clear goal

After A-Levels, I continued my studies and luckily because of the decent grades, I was eligible for a scholarship + PTPTN combination which helped reduce the tuition fee from RM84,000 to RM6,000. This wasn't without its requirements. I had to maintain a certain grade to keep my scholarship and if I wanted to apply for the PTPTN exemption of repayment, I had to achieve a first-class honour.

The consequence was big. It would roughly be a RM30,000 financial setback if I failed to achieve first-class honour. It would also mean that the first few years of work after graduation would be tied up to repaying the scholarship.

The goal was simple, get good grades.

I'm glad to say that I've achieved what I set out to do, and is now in the midst of applying for the exemption of repayment. It was not easy, but I'm glad I pulled through!

Other money lessons

Avoid bad debt at all cost

There is nothing more unsexy than a person with huge amounts of debt.

Prioritize and pay off high-interest bearing loans first. High-interest loans include credit card debt and personal loans. These loans typically carry an annual interest rate of well over 6%! High-interest loans can easily snowball into a huge amount due to the compounding effect³.

If you're not in any debt, think twice before borrowing. If you're already in debt, learn what it means to live below your means. Instead of staying alone, find a roommate. Instead of eating out, cook your own meals.

Don't mistake wants for needs

Technology has made shopping much more convenient. With so many services moving online, you can now literally get anything you want without taking a single step outside your home. But this convenience comes at a cost!

Everyday we're bombarded with sales/discounts and it's so tempting to click the "Add to cart" button. But how many of those items do you find yourself really using it? The next time you decide to buy something, ask yourself if you're going to actually use it often. If not, skip it. Not only will this prevent unnecessary clutter, it also saves you some money.

Ignore what others are buying

Like it or not, we often look at other people especially our peers as a way to assess ourselves. However, making financial decisions based on what others are buying can be a very expensive lesson. Everyone is in a different situation so never try to impress anyone with money you don't have. It makes no sense!

Pay yourself first

What you do today will decide what you can do in the future. Ideally, you want to set yourself up in a way that protects you from emergencies.

What you can do is to "pay yourself first" by allocating 5-10% of your montly salary in an off-boundary bank account, one that you shall never touch. You're essentially paying your future self to help him/her have an easier life.

The 50/30/20 rule is a good starting point for most people. 50% of your salary should be for needs, 30% for wants, and the remaining 20% for savings and investments. Checkout the budgeting calculator I made here!

Don't actually believe in YOLO

The people who encourage you that You Only Live Once (YOLO) are not responsible for your life!

Everyone has an opinion and it isn't necessary right.

Practise delayed gratification by making a list of all the things you want to buy, ordered from the most important to the least. Doing this will make it easier for you to see what you actually need. Also worth understanding is what impulse buying is, and how it is related to anxiety.

Closing

Lastly, learn to give back because there is more to life than money. Hope you've enjoyed this article!